ISBE Member Blog: The cost of conflict – what can SMEs teach the rest of us?




Adrian Wakeling, Senior Policy Advisor, Acas

If you were to ask me what I know about conflict in smaller organisations, my mind would go back to a seminal piece of research Acas published in 2016. In ‘Managing individual conflict in the contemporary British workplace’, Saundry et al found that for many SMEs conflict doesn’t exist at all. As the report says: “managers and owners of smaller enterprises claimed to have had little experience of conflict. They explained this in reference to the strong personal relationships that smaller teams can create and the ‘family’ atmosphere of small businesses.”

The cost of conflict in numbers

Of course, what was ‘contemporary’ then is very different now, for all sorts of reasons everyone will be very familiar with. But new Acas research on the cost of conflict has some startling news for today’s workplaces. The headline statistics in ‘Estimating the cost of conflict at work’ are:

  • conflict costs the UK £28.5 billion a year – this equates to £1,000 for every employee
  • nearly ten million people in the UK experience conflict every year – this can be everything from presenteeism to long-term absence and tribunal cases
  • the costs of formal interventions to prevent conflict are very low compared to the cost of formal procedures – £0.25 billion compared with £12.8 billion.

But do these costs apply to smaller organisations? The earlier research, on the perceived absence of conflict in SMEs, can be interpreted in two ways. One, the closer-knit relationships mean that problems are naturally nipped in the bud and there is a greater reluctance to get bogged down in time consuming procedures. Or, two, it’s actually quite inhibiting to try and raise problems when you are so close to everyone. Whatever the truth, there are surely some lessons that smaller organisations can teach larger workplaces.

The cost of conflict in human experience

Interestingly, one of the main recommendations from our report is that employers need to take conflict mores seriously, as an issue to be discussed at board level. But perhaps many smaller organisations already take conflict seriously by taking ‘people issues’ seriously. All conflict is about personal experiences – something that has been highlighted during the pandemic, with many people dealing with so many conflicting demands when it comes to caring, shielding, educating and, often, just surviving. The Acas report quotes the CIPD data that shows that conflict has the greatest impact on employee wellbeing – with over half of those who experience conflict suffering stress, anxiety and/or depression.

But before we wholeheartedly endorse the more informal ‘small firm approach’ to conflict, there is one big caveat – namely, not all conflict is bad. Conflict can be a natural and sometimes welcome way of generating ideas; or flagging problems that have gone unnoticed or been brushed under the carpet. Conflict can also be a necessary way of protecting an individual’s rights at work.  In the ideal world, employment law provides a safety net that is never needed. But in the real world, managers and employees don’t always behave as they should, and there has to be a means of seeking redress.

Perhaps the overall message might be best summed up as: ‘adapt a small firm approach wherever you can, by talking things through at the first sign of a problem; but don’t turn your back on conflict when it needs to be taken more seriously. Don’t just manage it; let it inform and teach you.’


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